November 8, 2010
Election Results Exacerbate State Budget Woes
Washington’s General Fund-State account continues to decline in tandem with stagnant job growth and faltering tax collections. Last Tuesday, Washington voters reversed the 2010 Legislature’s tax measure on certain foods and beverages; the tax will sunset on December 1, 2010. Notably, the American Beverage Association contributed $16.7 million in total to the campaign repealing these taxes, the most external contribution to any Washington initiative in our state’s history.
Governor Gregoire has released several statements indicating her understanding of current taxpayer frustration and will release an all-cuts 2011 Supplemental Budget, which will include further budget cuts to resolve any existing budget deficit for the current 2009-11 biennium. In addition, she must submit an all-cuts budget for the upcoming 2011-13 biennium by December 20. Both budgets will assume no new revenue growth and take into account past predictions of revenue, as summarized in the table below.
In the short-term, the UW already took a $17.1 million mid-term FY 2011 cut, and does not anticipate having to take another mid-term reduction before the start of the 2011-13 biennium on July 1, 2011. While we were asked to model 10 percent cuts for the upcoming biennium, UW administration anticipates that the state’s currently projected $4.7 billion revenue shortfall will necessitate further cuts to higher education institutions. Because two-thirds of the general fund budget is constitutionally protected and spent on K-12 education, corrections, and health and welfare activities, higher education is one of the major discretionary areas of spending left to cut.
Please check back regularly for more information about the budget, including an update to this table after the next revenue forecast is available on November 18. In addition, we will be providing more summary information about other mandated areas of the state’s budget, including the state pension system, K-12 education, corrections, and more.
